REORGANIZATION 

OF 


THE  BROOKLYN  ELEVATED  RAILROAD 
COMPANY. 


To  the  Holders  of  Mortgage  Bonds  and  Stock  of  the  Brooklyn 
Elevated,  RaUrood  Company,  aitd  Holders  of  Mortgage 
Bonds  of  the  Union  Elevated  Railroad  Company  and  the 
Seaside  and  Brooklyn  Bridge  Elevated  Railroad 
Company : 

When  it  became  apparent  that  the  financial  condition  of 
the  Brooklyn  Elevated  Railroad  Company  and  of  its  associate 
companies  was  such  as  to  render  it  necessary  to  place  the 
properties  in  the  hands  of  a  Receiver,  the  undersigned  Com- 
mittee were  requested  by  security  holders  representing  large 
interests  to  prepare  a  plan  of  reorganization. 

The  following  is  a 


Financial  Statement  of  "The  Brooklyn  M 

and  its  associate  compares,  December  31,  189G. 

Debits. 

Taxes  accrued, jlfout     $400,000  00 

Secured  debts^lue  financial  institutions  and  in- 
dividuals (security  consisting  of  $1,210,000 
Seaside  1st  Mortgage  Bonds )  .  _   G05,000  00 


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First  Mortgage  Bonds  of  the  Brooklyn,  6s   3,500,000  00 

Second     "          "       "    "        "       ,  5s   1,249,000  00 

First         11          "       "    "    Union,  6s   6,150,000  00 

Second      "          "       "    "       "   (Income),  l>*  2,068,000  00 

First        "         "       "    "    Seaside,  5s   1,365,000  00 

Capital  stock  of  the  Brooklyn   13,283,600  00 


Note. — There  was  cash  on  hand  $62,000  and  material  and 
coal  paid  for  $45,500. 

$50,000  Sea  Side  and  Brooklyn  Bridge  first  mortgage  bonds 
are  held  by  a  surety  company  as  an  indemnity  upon  the  under- 
takings in  legal  proceedings  it  has  executed  on  behalf  of  the 
Brooklyn. 

Credits. 

5.73  miles  of  elevated  railroad  of  "  The  Brooklyn." 
11.18  miles  of  elevated  railroad  of  "  The  Union." 
3.34  miles  of  elevated  railroad  of  "The  Sea  Side,"  includ- 
ing the  loop. 
95  locomotives. 
286  passenger  cars. 
16  supply  and  flat  cars. 

Sundry  contracts  with  advertising  and  electric  companies 
yielding  an  annual  income  of  $80,667.86. 

Keal  estate  and  mortgages  not  used  for  operating  purposes 
— market  value,  $75,000. 

Operating  Results  of  Combined  Companies  for  1896. 


Gross  earnings  from  all  sources  $1,718,688  13 

Operating  expenses  ._   1,029,988  63 

Net  earnings     688,699  50 

Fixed  charges,  including  all  taxes  paid  or  unpaid 
and  penalties  on  unpaid  taxes  in  arrears,  and 

including  interest  on  loans  of  $605,000  .1    882,083  76 

Deficiency  for  the  year  1896   193,384  26 


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Subdivision  of  Fixed  Chain  iks. 


Interest  on  $3,500,000  Brooklyn  1st  6s  $210,000  00 

"      "  $6,150,000  Union  1st  6s   360,000  00 

"      "  $1,249,000  Brooklyn  2d  5s   62,450  00 

"     "  $1,365,000  Sea  Side  1st  5s   68,250  00 

State  taxes  on  capital  and  earnings   15,443  35 

City  taxes  on  structure   93,493  73 

Penalties  on  arrears  of  taxes     23,755  74 

Interests  on  loans    34,588  20 

City  taxes  on  real  estate     5,102  74 


$882,083  76 

After  a  careful  investigation  of  the  affairs  of  the  Companies 
the  Committee  has  prepared  the  following 

PLAN  : 

I.  The  outstanding  first  and  second  mortgage  bonds  and 
stock  of  the  Companies  shall  be  deposited  with  the  Central 
Trust  Company  of  New  York,  under  an  agreement  lodged  with 
that  Company,  subject  to  the  order  of  the  undersigned  as  a 
Reorganization  Committee.  Negotiable  receipts  will  be  issued 
for  deposited  securities.  When,  in  the  judgment  of  the  Com- 
mittee, a  sufficient  amount  of  bonds  shall  have  been  so  de- 
posited, the  plan  shall  be  declared  effective. 

II.  The  mortgages  shall  be  foreclosed  and  the  properties 
purchased  by  the  Committee,  who  shall  cause  a  new  Company 
to  be  organized  to  acquire  the  property  and  franchises  of  the 
old  Companies. 


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The  new  Company  shall  issue  the  following 

New  Securities. 

$16,000,000  First  Mortgage  Bonds, 

bearing  interest  at  4  per  cent,  until  the  year  1905  and 
5  per  cent,  thereafter ;  principal  and  interest  payable 
in  1950  in  United  States  gold  coin  of  present  standard  ; 
interest  payable  in  New  York  City  semi-annually. 
Mortgage  to  cover  all  the  property  and  franchises  of  the 
new  Company,  including  after-acquired  property. 

$5,000,000  Preferred  Stock,  five  per  cent,  non-cumulative. 

$13,000,000  Common  Stock. 

III.  Assenting  security  holders  shall  be  entitled  to  cash 

and  new  securities  as  follows : 

Brooklyn  First  Mortgage  Bonds  and  )  ^  eac^  ^ond  . 
Union  First  Mortgage  Bonds,  ) 

$20  in  cash  for  each  coupon  maturing  on  and  after 

April  1,  1897,  pending  reorganization. 
$1,000  new  First  Mortgage  Bond. 
$200  new  Common  Stock. 
Seaside  First  Mortgage  Bonds,  contributing  to  the  Com- 
mittee $100  cash  per  bond,  for  each  bond  : 

$20  in  cash  for  each  coupon  maturing  pending  reor- 
ganization. 
$1,000  new  First  Mortgage  Bond. 
Also  $100  new  preferred  stock  for  such  cash  contribution. 
Brooklyn  second  mortgage  bonds,  contributing  to  the  Com- 
mittee $200  cash  per  bond,  for  each  bond  : 

sl4  in  cash  for  each  coupon  maturing  pending  reor- 
ganization. 
$700  in  new  first  mortgage  bonds. 
$300  new  preferred  stock. 
Also  $200  new  preferred  stock  for  such  cash  contribution, 


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Union  second  mortgage  income  bonds,  contributing  to  the 
Committee  $100  cash  per  bond,  for  each  bond  : 
$500  in  new  preferred  stock. 
$500  in  new  common  stock. 
Also  8100  new  preferred  stock  for  such  cash  contribution. 
Brooklyn  stock,  contributing  to  the  Committee  $10  cash 
per  share  of  old  stock  : 

$75  in  new  common  stock  for  each  share  of  old  stock. 
$10  new  preferred  stock  for  such  cash  contribution. 
Cash  contributions  are  to  be  payable  as  called  by  the  Com- 
mittee.   New  securities  to  be  delivered  when  reorganization  is 
completed. 

IV.  The  Committee  shall  organize  an  underwriting  syndi- 
cate to  furnish  the  money  necessary  to  carry  out  the  plan,  in- 
cluding the  payment  of  the  cash  contributions  of  security  hold- 
ers who  shall  not  assent  to  the  plan  or  shall  fail  to  make  their 
payments.  The  syndicate  shall  receive  a  commission  of  five 
per  cent,  in  cash  on  the  amount  for  which  they  subscribe,  and 
shall  be  entitled  to,  and  shall  represent  and  succeed  to  all  the 
rights  which  security  holders,  non-assenting  or  failing  to  con- 
tribute, would  have  been  entitled  if  they  had  contributed 
cash  as  required. 

V.  Whenever,  prior  to  the  expiration  of  one  year  from  the 
completion  of  the  reorganization,  a  contract  shall  have  been 
obtained  permitting  the  trains  of  the  company  to  cross  the 
New  York  and  Brooklyn  Bridge,  and  the  Committee  or  the 
Directors  of  the  new  company  shall  have  determined  to  change 
the  cars  and  the  motive  power  of  the  railroad,  and  to  make 
other  changes  and  betterments  connected  therewith  they  shall 
sell  to  the  syndicate,  and  the  syndicate  shall  purchase  from  the 
Committee  or  the  new  company  new  first  mortgage  bonds  not 
exceeding  $1,000,000  at  par  of  principal,  and  pay  therefor  $800 
in  cash  for  each  $1,000  bond,  receiving  as  compensation  and 


8 


commissions  $500  in  new  preferred  stock  for  each  bond  so 
taken  and  paid  for. 

VI.  The  moneys  received  by  the  Committee  under  the  plan 
shall  be  used  to  make  the  several  coupon"  payments  pending 
reorganization  as  required  by  the  plan  ;  to  pay  to  the  secured 
creditors  the  amounts  due  to  them  respectively,  the  collateral 
securities  now  held  by  such  creditors  to  be  delivered  to  the 
Central  Trust  Company  of  New  York,  to  be  held  for  the  pur- 
poses of  the  reorganization  and  ultimate  cancellation  ;  to  pay 
such  amounts  as  ma}'  from  time  to  time  be  ordered  or  approved 
by  the  Court  as  necessary  for  the  proper  conduct  of  the  busi- 
ness and  maintenance  of  the  railways  of  the  companies  ;  to  pay 
the  compensation  disbursements,  counsel  fees  and  other  proper 
expenses  of  reorganization,  and  for  such  other  purposes  as  the 
Committee  may  determine  to  be  for  the  best  interest  of  se- 
curity holders  and  necessary  to  carry  out  the  plan  and  make 
it  effective.  If  pending  reorganization,  connections  with  the 
New  York  and  Brooklyn  Bridge  shall  be  authorized  by  grant 
or  contract,  the  Committee  may  pay  such  amounts  as  may  be 
required  to  make  such  connections  and  the  necessary  altera- 
tions in  cars,  equipment  and  structure.  Any  balance  of  money 
remaining  after  completion  of  reorganization  shall  be  paid  to 
the  new  company. 

VII.  The  securities  deposited  under  the  plan  shall  not  be 
canceled  until  the  new  securities  shall  lmve  been  issued  and 
delivered,  but  shall,  with  the  coupons  on  which  cash  shall  have 
been  paid  pending  reorganization,  be  held  for  the  protection 
and  benefit  of  those  contributing  money  under  the  plan  ;  pro- 
vided that  they  shall  be  canceled  when  the  reorganization  is 
completed,  and  they  may  be  used  at  their  dividend  value  in 
payment  of  the  purchase  price  at  the  foreclosure  sales. 

VIII.  Provision  shall  be  made  in  the  new  First  Mortgage 
fur  building  the  remainder  of  the  lines  which  the  Seaside  Com- 


7 


panv  has  the  right  to  construct.  No  bonds  shall  l>o  issued 
under  the  new  first  mortgage  beyond  those  required  for  the 
purposes  of  the  reorganization,  and  to  meet  the  expense  of 
making  connections  with  the  New  York  and  Brooklyn  Bridge 
of  acquiring  necessar}-  property  and  rights  of  way  and  change 
of  motive  power  and  cars,  except  upon  consent  of  the  Trustee 
of  the  mortgage. 

IX.  All  preferred  and  common  stock  not  required  for  use 
for  reorganization  purposes  shall  be  held  by  the  Central  Trust 
Company  of  New  York  under  a  trust  agreement  authorizing  its 
use  for  future  requirements  of  the  reorganized  Company. 

X.  The  number  of  Directors  of  the  new  company  shall  not 
be  even.  The  common  stockholders  shall  elect  a  majority  of 
one,  and  the  preferred  stockholders  shall  elect  the  minority. 

Any  surplus  of  earnings,  after  payment  of  fixed  charges, 
shall  be  applied  to  the  payment  of  dividends  on  preferred 
stock  not  exceeding  five  per  cent,  in  any  year  (non-cumulative) ; 
any  excess  after  such  payment  shall  be  applied  to  pay  div- 
idends on  common  stock  up  to  five  per  cent,  per  annum  ;  any 
surplus  then  remaining  may  be  retained  by  the  Company  as  a 
reserve  fund,  or  applied  to  pay  dividends  equally  per  share  on 
the  preferred  and  common  stock. 

XL  Assuming  that  no  new  construction  will  be  required, 
the  mortgage  and  stock  obligations  outstanding  and  the  fixed 
charges  of  the  new  company  will  be,  until  1905,  as  follows  : 

First  mortgage  bonds,  $11,890,000,  @  4  %  S475,G00 

Taxes  on  structure,  per  annum     84,000 

State  taxes  (estimated)   24,000 

Total  annual  fixed  charges  858:5,000 

It  is  anticipated  that  there  will  be  a  considerable  sum  in 
cash  paid  by  the  Committee  to  the  new  company.  % 


s 


The  disposition  of  stock  will  be  as  follows  : 
Preferred  Stock. 


To  Brooklyn  Second  Mortgage  bondholders   $374,700 

To  contributors  of  cash   1,921,460 

To  Union  Second  Mortgage  Income  bondholders. .  1,034,000 
To  be  used  for  reorganization  purposes  or  held  for 

future  requirements   1,669,840 


$5  000,000 

Common  Stock. 

To  Union  Second  Mortgage  Income  bond  holders  $1,034,000 

"  Brooklyn  stockholders   9,962,700 

"  Brooklyn  and   Union   First  Mortgage  bond- 
holders    1,930,000 

To  be  used  for  reorganization  purposes  or  held  for 

future  requirements   73,300 


$13,000,000 

The  Committee  believe  the  proposed  plan  fairly  recognizes 
the  various  interests,  and  is  for  the  benefit  of  all.  Not  only 
will  the  pressing  burden  of  the  arrears  of  taxes  and  outstand- 
ing loans  be  removed,  but  funds  will  be  provided  for  the  heavy 
expense  of  crossing  the  New  York  and  Brooklyn  Bridge  and 
changing  the  method  of  operation  from  steam  to  electricity. 
The  saving  in  interest,  increased  travel  and  economy  in  opera- 
tion resulting  from  this  will  be  large  and  will  make  certain  the 
payment  of  the  reduced  interest  upon  the  first  mortgage  bonds, 
thus  making  them  more  valuable  than  they  are  at  the  present 
time  and  fully  making  up  for  the  reduction  of  their  interest, 
while  giving  reasonable  expectation  for  the  future  of  the  junior 
secuiities.  Provision  will  also  be  made  for  future  betterments, 
if  rendered  necessary. 


9 


For  full  particulars  and  details  of  the  plan  and  agreement 
reference  is  hereby  made  to  the  original  thereof,  filed  with  the 
Central  Trust  Company  of  NeAv  York. 

Securities  may  be  deposited  by  the  holders  thereof,  under 
the  agreement,  with  the  Central  Trust  Company  of  New  York, 
No.  54  Wall  street,  New  York,  who  will  receive  and  issue  its 
negotiable  receipts  for  any  of  the  following  existing  securities  : 

Brooklyn  Elevated  first  mortgage  bonds. 

Brooklyn  Elevated  second  mortgage  bonds. 

Union  Elevated  first  mortgage  bonds. 

Union  Elevated  second  (income)  mortgage  bonds. 

Seaside  and  Brooklyn  Bridge  first  mortgage  bonds. 

Brooklyn  Elevated  stock. 

New  York,  March  19th,  1897. 

F.  P.  Olcott, 

Chairman. 
James  T.  Woodward. 
Charles  Parsons. 
Ernst  Thalmann. 
Leonard  Lewisohn. 

Committee. 

J.  N.  Wallace, 

Secretary, 

54  Wall  Street,  N.  Y.  City. 


10 


Distribution  of  Securities. 


Liabilities. 


Brooklyn  Firsts.... 
Union  "  .... 

Seaside  "  .... 
Brooklyn  Seconds 

Union  Incomes  

Stock   ... 


3,500,000 
6,150,000 
1,365,000 
1,249,000 
2,068,000 
13,283,600 


Cash  to  be 

paid 
Committee. 

Mortgage 
Bonds. 

Preferred 
Stock. 

Common 
Stock. 

$3,500,000 
6,150,000 
1,365,000 

$700,000 
1,230,000 

1136,500 

136,500 

249,800 

874,300 

624,500 

206,800 
1,328,360 

1,240,800 
1,328,360 

1,034,000 
9,962,700 

$1,921,460 

$11,889,300 

$3,330,160 

$12,926,700 

[8853J 


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